Illinois

Illinoisans have fiercely resisted the imposition of new and higher taxes. The levying of the first 1% sales tax in 1933 to finance relief programs was bitterly resented, and the inauguration of a state personal income tax in 1970 led to the defeat of Governor Richard Ogilvie in his 1972 reelection campaign.

The state personal income tax is a flat 3%, with personal and child exemptions set at $2000. In 1998, the state abolished the local personal property tax and replaced it with a 2.5% addition to the state's 4.8% corporate income tax, bringing the total corporate tax rate to 7.3%. The proceeds from the 2.5% personal property replacement portion of the corporate tax are distributed to local taxing units. Illinois' general sales and use tax rate is 6.25%. There is a reduced rate of 1% on food and medicines. Local sales taxes range from 0% to 3%. The state imposes a full set of excise taxes, on tobacco products, motor fuels, amusements, pari-mutuels, public utilities, insurance premiums, and other selected items. In the budget crunch of 2001/02, Illinois was one of 20 states to raise the tax on a pack of cigarettes, in its case from $0.58 to $0.98 cents. Most property taxes are collected at the local level, where almost half of non-federal taxes (46.8% in 2000) are collected. Illinois' estate tax is tied to the federal exemption for state death taxes, and is therefore set to be phased out in tandem with the phasing out of the federal estate tax, unless the state takes positive action to establish an independent estate tax. Illinois' revenue losses from the phasing out of its estate tax are estimated at -$150 million for 2002/03, -$250 million for 2003/04, and -$400 million for 2006/07. Death and gift taxes accounted for 1.5% of state collections in 2002. Other state taxes include various license fees and a 4% timber fee that goes to the Department of Conservation.

Total state tax collections in Illinois in 2002 were $22.46 billion, of which 30.9% was generated by the state income tax, 28.5% by the state general sales and use tax, 20.5% by state excise taxes, 9.2% by the corporate income tax (which includes the personal property replacement tax), and 8.5% from license fees. In 2003, combined state and local taxes amounted to 9.4% of income, the 30th highest rate in the country.

The following table from the US Census Bureau provides a summary of taxes collected by the state in 2002.